Confirmation of large oil fields in the offshore waters of New Zealand could provide a step change in national income for the country, an energy briefing to the new Minister of Energy and Resources Gerry Brownlee says.
The Vote Energy briefing from the Ministry of Economic Development made public by Brownlee, says there are potentially several 1-10 billion barrel oil fields in the Great South Basin alone.
Any discoveries would perhaps allow New Zealand to follow in the economic footsteps of Norway and emerge as a serious source of energy for the world, the briefing says.
Economic benefits also accrue from exploration activity itself.
The Vote Energy briefing says that total annual production value of petroleum, coal and minerals of about $4.2 billion should increase significantly in coming years with production from the Tui, Pohokura, Kupe and Maari fields.
The Government currently collects around $137 million in royalties and energy resource levies, which are projected to rise to around $700 million by 2010/11.
The briefing says increasing production has been supported by government policies.
The Ministry recommends the continuation of a tax exemption for petroleum (including gas) exploration and development which is an important incentive for new gas and oil exploration. The tax exemption is due to expire in 2009.
The briefing says the exemption removed a strong disincentive on drilling rig and seismic ship operators to keep their equipment in New Zealand beyond a 183 day period (the point at which they would become liable for tax on all activity) -- a serious impediment to the overall level and scope of exploration activity.
Government funded seismic, technical reports and updated mineral knowledge was also a small but important component that global exploration companies have indicated make a difference in them seriously considering New Zealand as an investment location.
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